South Africa

Economic Apartheid In the Name of the People

December 17, 2010

When going too far to the right, one often meets the same opportunists (and idiots) coming from the 'left'. Such is the case with ANC Youth League (ANCYL) leader Julius Malema, bent on nationalization of mines, a notion believed to be grounded in the Freedom Charter (1955). The Charter embodies the sacred 'freedom demands' of SA's oppressed, collected by some 50 000 volunteers, during the apartheid era.
Those opposing Malema's statement argue that the Freedom Charter, endorsed by the ANC, never mentions the brand of mines 'nationalization' promoted by Malema.
Instead, it demands that 'national wealth be restored to the people...the mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole.'
Such could be interpreted as a strategic value system designed to restore national resources to the people by way of a democratically elected government as custodian ie: legal owners acting on behalf of the people. Moreover, Charter does not negate private property, but simply places the right of ownership and negotiation in the political hands of those mandated by the 'people'.
The context informing the Charter's drive to restore wealth was the militarized capitalism of the apartheid regime, exploiting lucrative minerals, using 'cheapened' black labor. (South Africa's Anglo-American, for instance, was the world's largest producer, at the time, of gold and diamonds in addition to being the world's largest private employer of black people. In 1988, Anglo controlled 85% of the company's listed on the Johannesburg Stock Exchange via banking, insurance, brewing, steel, electronic and other corporations; half the country's gold and platinum and almost all of SA's diamonds).
But the political climate in which the Charter was born, and the ideological language used to interpret the 'freedom demands' had fallen away since the demise of the countervailing socialist power - the Soviet Union. Similar to the capitalist ideology of the Soviet Union's enemies, the Kremlin used the language of 'justice' to concentrate power and resources in the hands of political elites and 'tenderprenuers' - politically connected elites milking state contracts.
The 1990s not only symbolized the demise of the Berlin Wall, but also the powerful rise of South Africa's liberation movement as ruling party in a world governed by the victors of the Cold War. These days, the neoliberal deregulated free market, presented as the non-negotiable condition of Western democracy, has been imposed on, and internalized by, many developing countries, including South Africa.
In his first public address, former President Nelson Mandela said, "nationalization of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our view in this regard is inconceivable."
Yet, as was disclosed in his latest book, Conversations With Myself', "The decisive moment... was when I attended the World Economic Forum in Davos, Switzerland, where....I realized, as never before, that if we want investments we will have to review nationalization without removing it altogether from our policy... we had to remove the fear of business that their assets will be nationalized."
In SA, the World Bank-approved Growth Employment and Redistribution (GEAR) strategy implemented a system of 'welfare capitalism': liberalizing trade and financial flows while embedding ill-designed privatization, tax holidays and monetarism. Meanwhile the poor were required to subsidize corporation exemptions through 'cost recovery', a fiscal policy requiring those classed as the poor to finance basic services that the State should have provided at no charge.
The result? South Africa currently hosts one of the world's highest inequality rates. People now had increased access to taps, but no money to afford the water. Africa's worst cholera outbreak occurred in Kwa-Zulu Natal (2000) when high pricing schedules evidenced water cut-offs in the province, quickly spreading to nine other provinces.
Many South Africans perceive the new vocabulary of a neoliberal democracy as inexorably working for those already possessing privilege. It was chiefly for this reason that in 2007, former President Thabo Mbeki was toppled.
The quiet coup was delivered just after South Africa's then-Finance Minister Trevor Manuel revealed, "GEAR was the ANC government's macro-economic program....which itself was an elaboration of the Freedom Charter."
The spirit of discontent catalyzed President Jacob Zuma's ascendance to power (and with him, that of Malema's own star). Yet Zuma's faction is sustained and fattened by the same neoliberalism integrated within the global financial architecture.
It is this brutal want that the Sandton-residing Malema strategically mines as his political anthem, particularly as it relates to the majority of the impoverished: SA's desperate youth.
This is not accidental: GEAR's strategy was to maintain the capitalist mineral-industrial system by bartering 'equity' or shares in multinationals through Black Economic Empowerment (BEE), creating in the process a politically connected black capitalist class.
As the country became progressively poorer, BEE elites raked in on SA's lucrative mineral resources creating uber-wealthy mining magnates such as Patric Motsepe and Tokyo Sexwale.
Then came the recession, forcing South Africa's fat political elites to contemplate lifestyle diets. In 2007, the value of Black Economic Empowerment (BEE) deals listed on the Johannesburg Stock Exchange (JSE) was estimated at R105 billion. Last year, the figure plummeted to R20 billion, decreasing from 111 deals to just 13. It was in the wake of this lifestyle recession exclusively enjoyed by politically connected tenderpreneurs - elites cashing in on patronage politics, that the Malema began banging on nationalisation of South Africa's mineral resources as a means of lifting the poor out of poverty and income equality.
Does Malema himself have a stake? Though he was registered as an active director of SGL Engineering Projects, on the receiving end of R140 million in state tenders, Malema claimed his signature was forged. Hre may well be right.
Such a mistake would also be too sloppy. Tenderprenuers often work through nominee shareholders and directors, tapping into the most lucrative contracts of all: provincial tenders.
Nominees are those persons and companies selected by beneficial or ultimate owners to conceal their own identities from the public. In this way, citizens and the media remain largely unaware of who owns what in SA as piercing the corporate veil remains almost impossible.
But the broader call for nationalization must be put in context:
Malema's focus on nationalization coincided with (in fact, was delivered a week after) a major deal, developed in his home province of Limpopo. The major players included 60% owned by China's Sinosteel subsidiary (Eastern Asia Metals Investment Co Ltd) and the Limpopo Economic Development Enterprise (Limdev).
Malema was linked to the R250 million deal as a negotiator connected to the BEE consortium. Limdev was expected to receive R700 million for the sake of its shares to BEE partners, retaining 10%. On August 29, Mines Minister Susan Shabangu wrote to Limdev, not regarded a legitimate BEE partner, instructing it to halt its sale to BEE partners. In May 2010, Parliament's mining portfolio committee blocked the sale.
To date, the Congress of the South African Trade Unions (COSATU) and the South African Communist Party (SACP), the twin left legs of the tripartite alliance with the ANC, have cautioned against the selective drive to nationalize mines.
Ironically, both are supporters of strategic state intervention. Yet they have called out 'political hyenas' and the 'narrow "black economic empowerment" (BEE). "Narrow BEE focus has actually set back the real transformation of the critical mining sector and, therefore, the overall transformation of our economy," declared the SACP.
The truth is the current leadership trying to capture the center of the ANC is empty of any real historical or ideological grounding. The elegant but lethal conservatism of Mbeki has been replaced by a crude looting breeding greater and greater resentment.
In many ways, Malema - who once called a BBC journalist a 'bloody bastard agent small boy', does not represent the rank and file of the ANC supporters, bearing the burden of very real socio-economic injustices. Rather, he is a kind of political parenthesis, a convenient – and deliberate distraction from the reality of business-as-usual. And mines nationalisation? Well, that too appears to be another strategic and very lucrative way to bring wealth to the people, I mean ….BEE-ple.